SAN JOSE — A San Jose office building has tumbled into default on a loan, a disquieting indicator that post-coronavirus economic gremlins still haunt the Bay Area real estate market.
The office building whose mortgage is delinquent is at 110 Baytech Drive in North San Jose’s Alviso district, according to documents filed on Aug. 15 with the Santa Clara County Recorder’s Office.
Money360, an online marketplace for real estate loans, provided the financing in 2019 to the building owner Alviso Park LLC, and not Nariman Teymourian as an individual, the county records show.
The original loan that’s in default totals $16.3 million, according to the public real estate documents.
Including the principal, late fees, interest, penalties and other costs, the current amount owed is slightly over $18 million.
The mortgage delinquency represents the second time in about a year that a real estate loan for the building has landed in default.
In August 2022, a notice of default was filed against the building. County records show that within the next several days, the default was rescinded, an indication that the mortgage payments were back on track.
The nation’s Central Bank has launched a quest to ward off fast-rising inflation by imposing sky-high interest rates. The Federal Reserve is betting that the higher rates will help cool off economic activity by curbing the appetite — or ability — of people and companies to borrow money.
The problem is that the Fed’s gambit has caused interest rates to skyrocket. As owners of commercial and residential properties attempt to scout for new financing to replace existing loans that are expiring, the new loans that are available can be prohibitively expensive.
The factors behind this loan default by Alviso Park LLC, the building owner, were unclear.
The building totals 58,000 square feet and is fully leased to Lyten, a green energy company that has created and is producing a lithium-sulfur battery that can use cheaper materials than conventional batteries.
The borrower could potentially have months to attempt to cure the default and get the mortgage payments back on track.
At some point, however, if the loan default isn’t remedied, it’s possible the lender could attempt to seize the office building through a foreclosure process.
Silicon Valley’s office vacancy rate ballooned during the April-through-June second quarter to what experts describe as a “historic” 21.6%, Cushman & Wakefield, a commercial real estate firm, reported recently.
Office vacancies through the Bay Area have shot to record high levels, a series of indicators that point to the economic fallout unleashed by the consolidation in the tech sector and the side effects of the coronavirus pandemic.
